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Income statements for Thornton Company for Year 3 and Year 4 follow: THORNTON COMPANY Income Statements Year 4 Sales $200,200 Cost of goods sold 142,400

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Income statements for Thornton Company for Year 3 and Year 4 follow: THORNTON COMPANY Income Statements Year 4 Sales $200,200 Cost of goods sold 142,400 Selling expenses 20,200 Administrative expenses 12,600 Interest expense 3,700 Total expenses $178,900 Income before taxes 21,300 Income taxes expense 6,600 Net income $ 14,700 Year 3 $180,200 120,400 18, 200 14,600 5,700 $ 158,900 21,300 4,000 $ 17,300 Required a. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4. b. Perform a vertical analysis, showing each income statement component as a percentage of sales for each year. Required A Required B Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4. (Negative answers should be indicated by a minus sign. Round your answers to 1 decimal place. (i.e., .234 should be entered as 23.4).) THORNTON COMPANY Horizontal Analysis of Income Statements Percentage Change over Year 3 Sales 11.1 % Cost of goods sold 18.3 Selling expenses 11.0 Administrative expenses (13.7) Interest expense (35.1) Total expenses 12.6 Income before taxes 0.0 Income taxes expense 65.0 Net income (loss) (15.0) % Required A Required B Perform a vertical analysis, showing each income statement component as a percentage of sales for each year. (Percentages may not add exactly due to rounding. Round your answers to 1 decimal place. (i.e., .234 should be entered as 23.4).) THORNTON COMPANY Vertical Analysis of Income Statements Percentage of Percentage of Sales Year 4 Sales Year 3 Sales 100.0 % 100.0 % Cost of goods sold Selling expenses Administrative expenses Interest expense Total expenses Income before taxes Income taxes expense Net income

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